Public Interest Groups Slam New Verizon Wireless Pricing Plans
Verizon Wireless Tuesday unveiled plans under which customers would pay monthly fees and share data, voice minutes and text messages across multiple devices, from smartphones to tablets to notebooks -- up to 10 Verizon Wireless devices. The Share Everything Plans are a first for the U.S. wireless industry. The announcement was not a surprise and had been well telegraphed by Verizon. The plans kick in June 28.
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"Customers asked, and today Verizon Wireless delivered an industry first,” said Tami Erwin, Verizon Wireless chief marketing officer. “Customers no longer have to think about their voice and message plans, because both are unlimited.” Customers would choose their devices, paying, for example, a monthly fee of $40 for a smartphone, $30 for a basic phone, $20 for a notebook and $10 for a tablet. They would then choose a data and voice plan. Under the entry-level plan, for an extra $50 a month, they get unlimited minutes, unlimited messages and a shared data allowance of 1 GB. The most expensive plan offers 10 GB of data for $100.
In a Tuesday research note, Sanford Bernstein analyst Craig Moffett called the announcement the “most profound change to pricing the telecom industry has seen in twenty years.” “AT&T has already indicated that they will soon follow,” Moffett said. “We believe that Verizon’s Share Everything plans will eventually become ubiquitous, as new customers will be required to take these plans, and existing customers make the transition over to the 4G LTE network."
"While at first blush this may seem to be a price cut for [Verizon] and may make the definition of ARPU a bit blurry, we view this as a very positive move,” said Jennifer Fritzsche, analyst at Wells Fargo. “The main benefit is to stimulate device adoption and usage on its LTE network. With a significant LTE coverage advantage over its peers, [Verizon] is in a solid position to make this move now and act on this point of competitive strength."
But critics were quick to pounce. “The main goal of these new plans is to get consumers sharing more of their money with Verizon,” said Free Press Policy Director Matt Wood. “These tactics show just how uncompetitive the market for wireless services has become, as Verizon and AT&T gobble up spectrum, tie more products together and lock customers into bad deals. Just when people have started using fewer voice minutes and text messages, Verizon’s response is to make them buy unlimited voice and texts. You may want less, but they make you buy more. That’s exactly the opposite of how a functioning market should work."
"Today marks the latest in a long line of price increases masquerading as consumer friendly changes,” said Michael Weinberg, senior staff attorney at Public Knowledge. “Verizon is offering consumers more of what they do not want and charging them more for what they do want. Verizon customers will now pay more for much less. This change will hit late adopters the hardest, many of whom are lower-income individuals. One year ago consumers could pay $30 for unlimited data. Today, it costs them $50 to get 1 GB per month.”